South African Rand will struggle to break R11.80/$

The rand opened slightly weaker this morning, trading above R11.90/$, and will struggle to find the momentum to break meaningfully below the R11.80/$ target level.

Photo: Shutterstock.

Factors driving current rand levels remain mostly the same as last week, namely continued strong commodity prices and a soft US dollar.

The National Prosecuting Authority (NPA) is also forging ahead at an impressive rate in the state capture debacle, assisting in the revival of positive investor sentiment in South Africa.

Today’s ZAR weakness stems from a slight uptick in the dollar after six weeks of consecutive losses. Markets also seem to be a bit wary in anticipation of Eskom’s financial results due to be released tomorrow, which could spark further volatility.

This caution puts into perspective the dire state that South Africa still finds itself in as a result of weak economic fundamentals, despite the support that strong commodity prices and the weak dollar have offered local currency.